Benchmark iron ore prices sank on Thursday as doubts about the efficacy of Chinese economic stimulus resurfaced, while coking coal prices plummeted amid oversupply and import restrictions imposed by Beijing.
The Chinese import price of 62% Fe content ore fell 3.3% on Thursday to $93.23 per dry metric tonne according to Fastmarkets MB, after coming close to triple digits last week.
On the Dalian Commodities Exchange iron ore futures closed down 4.6% at 638 yuan (just under $90 a tonne) and Shanghai rebar – the world’s most traded steel contract – lost more than 3%.
The Australian export price of metallurgical coal (FOB hard coking coal Fastmarkets MB) used in steelmaking tanked 7% to $122.50 a tonne. That’s down almost $70 a tonne compared to the start of the year.
Fastmarkets MB in a market report says the availability of ample cargoes of lower quality seaborne coking coal and a lengthy, uncertain customs clearing process “have raised the possibility of traders engaging in panic selling”:
“There seems to be some panic selling among traders who are concerned about a further drop in demand with the import quotas at Chinese ports nearly exhausted,” a buyer source in the country said.
Import volumes remain strong, for now
China’s iron ore purchases in August totalled just under 95m tonnes, up 4.2% from July and 6.2% from last year, customs data showed, marking the highest level of imports since January 2018.
Iron ore imports are set to reach another record in 2019, with annualized shipments running at 1.12 billion tonnes, despite the fall in output following the deadly dam burst in Brazil in January.
Beijing’s imposition of import quotas and onerous customs procedures was aimed at shoring up local coal miners, but to date it has had little impact.
The country imported 220m tonnes of coal (steam and coking coal) during the first eight months of the year compared to 280m tonnes for all of 2018.
Montel quotes Vivek Dhar, commodities analyst for Commonwealth Bank in Melbourne as saying higher prices for domestically-produced coal is behind the strong import numbers, but Beijing is keen to limit imports to around last year’s volume:
“What has happened has definitely irked policymakers in China,” said Dhar. “That puts a lot of pressure on coal imports for the end of the year.”
At least two northern ports – Qinzhou and Fangcheng – had already imposed additional customs delays, he said, with a chilling effect on imports likely to gain in the coming months.
Fonte: Mining.com